Department of Employment and Workplace Relations v Howell, in the matter of Castel Electronics Pty Ltd (No 2)

[2025] FCA 1629

Federal Court of Australia

Built by Barristers,
For Australian Law.

1. Commercial and Corporations
1. indemnity claim by receivers and managers who failed to make priority payments from personal property circulating assets as required by s 433 of the Corporations Act
1. whether deed of novation operated to substitute a successor party for the indemnity obligation of the appointing party CONTRACT
1. interpretation of exception and proviso to indemnity clauses concerned with personal default, neglect or negligent act or omission-held contractual indemnity claims not made out ESTOPPEL

Estoppel by convention extends to mutual assumptions about the parties' private legal rights — not merely assumptions of fact — where both parties adopted the assumption as the conventional basis of their dealings and one party acted to its detriment in reliance on it; the estoppel precludes the other party from resiling from the assumption to invoke contractual exclusion clauses.
In a receiver's indemnity deed, 'personal default or neglect' denotes a failure to comply with a duty imposed by statute or contract (here, s 433 of the Corporations Act) and is distinct from 'negligent omission', which requires assessment against the standard of reasonable care; both may independently engage an exclusion clause even where the receiver acted on qualified legal advice.
A receiver and manager who is uncertain whether realised proceeds are subject to the priority payment obligation under s 433 of the Corporations Act is expected, as a matter of reasonable professional care, to seek judicial directions under s 424 rather than rely on qualified legal advice and the secured creditor's assurances, and does not require the appointing creditor's consent to do so.